9911796707
TMI Blog1981 (9) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... leted under section 143(1) accepting the total income as declared by the assessee. Subsequently, the ITO considered it necessary to verify the correctness and completeness of the return filed by the assessee. Accordingly, be, after obtaining the approval of the IAC, invoked the provisions of section 143(2)(b) and issued notice under section 143(2) in response to which the assessee produced books of account. The ITO after examination of the books of account and other evidence came to hold that the expenses were unvouched and undetailed and that the accounts were not open to verification in the absence of detailed construction-wise expenses. He, therefore, estimated the net income at Rs. 90,080 by application of a net profit rate of 13 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the scope provided under section 147 of the Act. The AAC observed that the ITO was found to have taken prior approval of the IAC before issue of notice under section 143(2)(b) and he held that the proceedings were initiated validly by the ITO. Coming to the merit of the case, the AAC, considering the past record of the assessee, held that the application of net profit rate at 13 per cent on the net receipts was just and proper. He, therefore, dismissed the assessee's appeal. 4. This has brought the second appeal by the assessee before us. It was contended by the learned counsel for the assessee that the AAC was wrong in his decision that the proceedings under section 143(2)(b) were validly initiated by the ITO. He invited our attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, submitted that the lower authorities were not justified in applying a flat rate of profit ignoring the circumstances under which the assessee could not achieve normal rate of profit. He, therefore wanted us to set aside the orders of the lower authorities. 5. The learned departmental representative, on the other hand, took us through the provisions of section 143(2)(b) and the proviso thereto, and urged that the ITO had not done anything wrong in initiating proceedings under section 143(2)(b). He submitted that the ITO while framing the reassessment under section 143(3) by mistake mentioned that he was doing so as per the instructions of the higher authorities. According to him, what the ITO wanted to say was that the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to cause to be there produced, any evidence on which the assessee may rely in support of the return: Provided that, in a case, where an assessment has been made under sub-section (1), the notice under this sub-section [except where such notice is in pursuance of an application by the assessee under clause (a)] shall not be issued by the Income-tax Officer unless the previous approval of the Inspecting Assistant Commissioner has been obtained to the issue of such notice." It would appear from the facts of the case that the original assessment was completed under section 143(1) which involved no investigation. The past record of the assessee would show that a net profit rate of 13 per cent was applied right from the assessment years 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the assessee as to the validity of the proceedings under section 143(2)(b) are not tenable. 7. None of the decisions cited by the learned counsel for the assessee is a direct authority on the point at issue and they are distinguishable on facts. Hence, we consider it unnecessary to discuss them. 8. Coming to the merit of the case, we see that all along in the past, under similar circumstances, the net profit rate of 13 per cent was applied in determining the assessable income of the assessee. We are unable to accept the submissions of the learned counsel for the assessee that due to time lag between the time of submission of a tender and completion of work there was an increase in the price of raw materials which resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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